PwC BC Mining Report 2015: The worst is behind us
PwC has released its annual British Columbia Mining Survey which outlines the financial results of BC’s mining industry in 2015. — Photo courtesy PwC and BIV
PwC has released its annual British Columbia Mining Survey which outlines the financial results of BC’s mining industry in 2015. It also highlights the challenges and opportunities for the sector, which is a key contributor to the BC economy as well as Canada’s GDP.
Commodity prices have been on a downward trend for the past five years, which has put pressure on the budgets and operations of BC’s mining companies in 2015. The continued drop in the price of key metals and minerals, particularly metallurgical coal and copper, has led to a number of mines in BC being put into care and maintenance until prices recover. Still, BC’s mining industry continues to prove resilient. While most mining companies have been cutting spending and curtailing operations to help withstand the current price environment, others continue to raise money and advance projects.
The continued downturn in commodity prices is evident in the financial results of companies in our 2015 survey of BC mining companies. Gross mining revenues fell to $7.7 billion in 2015, compared to $8.2 billion in 2014. On the positive side, cash flow from operations remained consistent with 2014 at $1.7 billion. As a result of ongoing market volatility capital expenditures are declining with overall spend down to $1.2 billion in 2015, compared to $1.5 billion in 2014.
PwC estimates 2,000 direct jobs were lost in British Columbia mine closures or downsizing.
There are also examples of companies that have continued to raise money and advance projects, which demonstrates the stamina of the BC mining industry in difficult times and the confidence investors have in the experienced management teams behind these operations. It also reflects the optimism that the industry will bounce back.
Mark Platt, mining sector at PwC, told a recent Vancouver mining audience, "Conditions are challenging, but hopefully we've reached the bottom."
On the positive side of ledger two new mines went into production in 2015. Imperial Metals' Red Chris copper mine and Thompson Creek Metals' Mount Milligan copper-gold mine in the Prince George area both started up. The Association of Mineral Exploration in BC (AMEBC) estimated that $272 million was spent in 2015 on exploration and development and some 100+ exploration projects are underway throughout British Columbia.
Gavin Dirom, CEO of AMEBC also stated, "I'm going to go out on a limb and just say I think the worst is behind us."
